How Can we Reduce Drug Costs?

Recent outrage by a pharmaceutical company that sent the price of an important medication through the roof has sparked debate on everything that is wrong with this industry. "The price of Daraprim, a drug used to treat a life-threatening parasitic infection, increases from $US13.50 per tablet to $US750, after being acquired by a start-up ...". Outraged, many people are asking, how can they get away with this and what can be done to stop it? For starters, lobbyists have successfully blocked most attempts to regulate this industry. To complicate matters more, it costs so much just to develop and test a new drug that the incentive is not there unless consumer prices are raised. According to the California Biomedical Research Association, "On average, it will cost a company $359 million to develop a new drug from the research lab to the patient." Then there is always that sticky little matter of lawyers. With class action lawsuits sometimes costing billions of dollars, high risks demand greater rewards.

Given the situation, how can we actually reduce the costs of pharmaceutical drugs? Certainly some limits should be set on the amounts that can be asked in class action lawsuits but this alone is not enough. Why does it cost so much to develop new drugs? Much of the cost actually occurs during the human testing phase. To even be considered, the drug company must raise hundreds of millions of dollars. For this reason, many good medications never even make it this far even after they have been developed. Fear of litigation has set the bar so high that the FDA (Food and Drug Administration) has to be strict. Some would argue innovation has been stifled because standards are set too high. In their defense, the FDA has been criticized for being wrong in the past letting some medications with dangerous side effects slip through the cracks. Personally, I think the whole system is at fault. Human drug trial costs are excessively high and could probably be reduced if overzealous mandates were eased. This does not excuse inefficiency, wasteful spending, greedy investors or improper testing but unless a coordinated effort is made to both reduce development costs and corporate liabilities, the likelihood is that no real progress will be made.

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